Underworld: Evolution is the second film in the Underworld series, following Underworld in 2003. Evolution continues the feud between Vampires and Lycans, but highlights glimpses of their origins some centuries ago.

Underworld Evolution is an immediate follow-up to Underworld. Therefore, the events of Evolution begin during the same night of the first film's finale, and ends only one night later. It has several more constructive plot elements than its predecessor.

The movie opens in the year 1202 AD in which an army led by three vampire elders (Marcus Corvinus, Viktor and Amelia) arrives at a ravaged village. The vampire army is attacked by Lycans, and a bloody battle erupts. In the melee, Viktor and Amelia capture Marcus's brother William Corvinus, the first and most powerful werewolf. Viktor orders that William be imprisoned in a secret location forever.

The story then continues the present-day timeline, starting immediately after the events of the first film. Selene takes Michael to a vampire safe house so that she can return to the mansion to confront Kraven, the traitor from the first movie. However, Singe's blood has already awakened Marcus, who has become a powerful Hybrid from the Lycan blood and wipes out the entire remnant of Kraven and his men and the mansion as retribution for Viktor's treachery. He learns Selene and Michael's location from camera surveillance of various safe houses and leaves to track them down.

When confronted by Marcus, Selene defends her actions, and Marcus agrees that Viktor got what he deserved. However, he believes Selene is hiding something and attacks her; Michael intervenes and protects her. Marcus tries and fails to get hold of the pendant that the two have in their possession (which they stole from Lucian). They escape and seek refuge in an abandoned warehouse, where they make love.

Meanwhile, Lorenz Macaro, an elderly and imposing man, sends in a team of "Cleaners" to investigate the aftermath from final battle in the first movie. When Macaro examines Viktor's body he finds a metal disk attached to his ribcage just below the skin of his chest similar to Sonja's pendant, which Selene and Michael possessed.

Now knowing that the pendant is of some importance to Marcus, Michael and Selene set out to solve its mystery. Selene recalls that she'd seen it as a child, but doesn't know its significance. To find answers, they travel to the hideout of Andreas Tanis, who is an exiled vampire historian and old enemy of Selene (she was the one who exiled him). After dispatching the various Lycans and Vampires guarding Tanis, they confront him and discover that Tanis had been secretly trading vampire-killing weapons with Lycans and forces him to tell them as much as he can.

Tanis reveals that Marcus, not Viktor, was the first vampire. One of the two sons of Alexander Corvinus, he was bitten by a bat, and became a vampire; his twin brother, William Corvinus, was bitten by a wolf and became a Lycan. Unlike later Lycans, William and the Lycans created by him are entirely animal and unable to take human form again. Due to William's wanton destructiveness, Marcus approached Viktor, a warlord, as he was dying of old age, and offered to turn him and his army into immortal vampires in exchange for tracking down and stopping William. Marcus intended to capture his brother and tame him, but Viktor betrays Marcus and orders William locked away forever. Viktor is ultimately falsely regarded as the first vampire and is happy to assume this role with both William and Marcus in hibernation. He does not kill the brothers because he believe doing so would result in the immediate extinction of all other vampires and Lycans. Tanis also reveals that Selene's father was the architect who built William's prison and that the pendant is its key. Viktor thought that her family knew too much about its location, and subsequently killed and fed on them, and then turned Selene into a vampire. Tanis then refers Selene and Michael to Lorenz Macaro, stating he can help stop Marcus. Shortly after they leave Marcus arrives and questions Tanis. He bites him to absorb his memories, which kills him afterward.

Selene and Michael go see Lorenz Macaro, whom Selene realizes is actually Alexander Corvinus, Marcus and William's father and the oldest of the immortals. He reveals he has devoted his life to containing the vampire-lycan war to keep it from escalating over to the mortal world. However, he refuses to help kill Marcus as he is his son. Their debate is stopped when Marcus attacks the boat. He learns the location of William's hidden prison by drinking Selene's blood and proceeds to kill Michael and mortally wound Alexander to obtain the other half of the pendant. Marcus reveals that he wishes to become a god and rule a race of Hybrids. Once Marcus has left, Selene talks with the dying Alexander and he has her drink his blood, stating that by doing so she will become 'the future'.

Selene leads the cleaners to the prison to confront and destroy Marcus, but they arrive too late and find that Marcus has already freed William. A violent battle ensues, which Selene and the Cleaners seem to be losing. Michael, apparently dead and in a bodybag, suddenly regenerates and joins the fight. Michael, transformed into his hybrid Lycan/Vampire state, ultimately kills William while Selene fights and kills Marcus. It is at this point that Selene's eyes turn from vampire blue to pure white, before reverting to the former color. They are the only beings left alive as daylight arrives and sunlight streams into the cavern from overhead. Selene is not harmed by the ultraviolet light, however, and stands in the full daylight unaffected, her ice blue eyes now brown. As the film ends, Selene narrates that she fears dark days are ahead and the lines between the species have become blurred, but states that she is at least optimistic that she won't have to face the future alone.